Unjust enrichment does not bar refund where duty-paid intermediate goods are captively consumed and embedded in finished product costs.

Refund claims arising from duty-paid intermediate goods used in captive consumption are not defeated by unjust enrichment where the goods are not sold as such. The duty on the intermediate product is treated as part of the cost of the finished goods, so the burden is not passed on in the direct sale sense contemplated by the refund restriction under Section 11B(2) of the Central Excise Act. On these facts, the unjust enrichment objection was inapplicable and refund could not be denied on that ground; the lower authority's refund relief was sustained.

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Issues: Whether the principle of unjust enrichment applies to refund claims where the duty-paid goods are captively consumed and not sold as such.

Analysis: The refund claim arose from duty paid on intermediate products used within the manufacturing process of final products. The governing principle applied was that, in cases of captive consumption, the burden of duty on the intermediate goods forms part of the cost of the finished goods rather than being directly passed on by sale of the same goods to another buyer. In such a situation, the objection based on unjust enrichment does not succeed in the manner contemplated by the refund restriction under Section 11B(2) of the Central Excise Act.

Conclusion: The principle of unjust enrichment was held inapplicable on the facts, and the refund claim was not to be denied on that ground.

Final Conclusion: The Revenue's challenge failed, and the refund-related relief granted by the lower authority was sustained.

Ratio Decidendi: Where duty-paid goods are captively consumed and the duty becomes part of the cost of the finished product, refund cannot be denied on the ground of unjust enrichment merely because the burden is indirectly embedded in the final product.

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